The three most important, however, are still line charts, bar charts and candlestick charts, and the following explanations will be limited to their basic presentation.

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Line charts are simple but incomplete

Line charts are the simplest variant for the graphical representation of price trends. The principle is very simple: a point is drawn on the chart for the last price of each period (day in the daily chart, hour in the hourly chart, month in the monthly chart, etc.). The points are connected with straight lines to create the typical "zig-zag" pattern.

As simple as line charts are, they are also incomplete. The restriction to the last price in each case withholds a lot of information about the price development during a period from the viewer. This information can be extremely important: If, for example, a market reaches a new high intraday in an upward trend and then closes lower than the previous day, this is a reversal day, which indicates a possible trend reversal or correction. The line chart only shows a price decline, which in itself does not necessarily have any significance.

Bar and candlestick charts provide more information

Bar charts provide this information as well. A bar chart consists of a vertical line with a "hook" on the right and left. The upper end of the vertical line marks the highest and the lower end the lowest point of the period. The hook on the left of the vertical line corresponds to the opening price, the hook on the right of the line marks the closing price or the last price of the period.

In addition to reversal days, bar charts can provide further indications that fall by the wayside in representations with line charts. If the closing price corresponds to the highest price of the period (the right tick is at the top of the vertical line), this tends to be a signal for a strong market. Since the bars of the individual periods are not connected, price gaps can also be identified in the chart. Price gaps are extremely strong indicators of market development: upward gaps signal strong momentum, downward gaps often herald a crash. Price gaps also act as resistance or support.

Correct chart setting: candlestick charts with logarithmic scaling

Candlestick charts, which are also often referred to as "candlesticks", provide even more information than bar charts. Each individual period consists of a candle body, a wick (top) and a shadow (bottom). In rising markets the candlestick is white and in falling markets it is red (the chart settings also allow other colour schemes).

Here is main advantage of candlesticks from thai traders point of view: ข้อได้เปรียบหลักของแผนภูมิแท่งเทียนเหนือแผนภูมิแท่งคือการแสดงภาพที่ดีขึ้นของแนวโน้มตลาดที่เอาชนะ: มันสามารถมองเห็นได้อย่างรวดเร็วว่าแนวโน้มใดเด่น. นอกจากนี้การรวมกันของเชิงเทียนต่าง ๆ ใน ดาวน์โหลด metatrader 4 และรูปลักษณ์ภายนอกให้ข้อบ่งชี้ที่เป็นรูปธรรมของแนวโน้มตลาดระยะสั้นและระยะกลาง.

The main advantage of candlestick charts over bar charts is the improved visual representation of the overriding market trend: it is quickly visible which trend is predominant. In addition, various candlestick combinations and appearances provide concrete indications of the short- and medium-term market trend.

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Tips and tricks for chart settings

In addition to the chosen chart display format, the scaling of the charts is also important. Professional chartists use candlestick charts in conjunction with logarithmic scaling. This takes into account relative rather than absolute price changes. An example: If the DAX rises from 4000 to 4400 points, this corresponds to a distance of 400 points or 10 percent. If the DAX rises from 8000 to 8400 points, this also corresponds to a distance of 400 points, but only 5 percent.

In a linear chart, both price movements have an identical vertical distance because only the absolute distance is measured. In a logarithmic chart, the second movement is only half as "long" as the first because only percentage movements are taken as a basis.